Nokia Settles Patent Dispute With Lenovo

Nokia has finally settled a multi-year patent dispute with Lenovo Group through a multi-year, multi-technology patent cross-licensing agreement. The company did not disclose the terms of the agreement, however, Lenovo will make a net balance payment to Nokia.

Nokia Technologies’ (NOK) President, Jenni Lukander said, “We are delighted to have reached an agreement with Lenovo. The agreement reflects Nokia’s decades-long investments in R&D and contributions to cellular and multimedia standards. We appreciate, and very much respect, the constructive spirit Lenovo brought to our negotiations and look forward to working together to bring further innovation to their users around the world.”

According to a Reuters report, Nokia’s legal tussle with Lenovo Group (LNVGY) started in 2019 when the company filed a complaint for alleged infringements of Nokia’s video-coding patents and had cases in Brazil, United States, India and Germany.

Nokia’s patent portfolio consists of 20,000 patent families that includes 3,500 patent families essential to 5G. (See Nokia stock analysis on TipRanks)

Last month, Northland Securities analyst Tim Savageaux assigned a Buy rating with a price target of $6 on the stock. This implies upside potential of around 50% from current levels.

Savageaux said in a research note, “The shift in focus, however, to best of breed competitiveness vs reliance on end to end is positive, as is the focus on differentiated core IC [integrated circuit] technology across all aspects of the Mobile and Network Infrastructure businesses, from Mobile (Reefshark) to Optical (PSE-V), Routing (FP4, the first slide in CEO Lundmark’s deck) to Fixed Access (Quillion).”

“While it remains ironic that the former ALU/wireless units have been under scrutiny and the source of management turnover despite being faster growing (2% vs 1% Mobile) and more profitable (9-12% target vs 5-8% mobile), we think the breadth of NOK’s portfolio offers synergies and competitive position within markets remains strong,” Savageaux added.

The rest of the Street is cautiously optimistic on the stock with a Moderate Buy consensus rating. That’s based on 3 analysts suggesting a Buy and 3 analysts recommending a Hold. The average analyst price target of $5.13 implies around 28.3% upside potential to current levels.

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